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How our activities enriched our stakeholders



VALUE CREATED FOR GOVERNMENTS AND REGULATORS

ZAR4.7bn

VAT and sales taxes collected

ZAR2.1bn

employee taxes paid and collected

ZAR3.5bn

paid in corporate income taxes

ZAR1.0bn

withholding taxes paid and collected

ZAR0.7bn

paid in customs, excise and other operating taxes



The total tax contribution amount reflects all cash taxes(1) paid and(2) collected by the group. The 'tax paid' amount is the actual cash tax incurred and paid by the group in FY20 and includes corporate income tax, property taxes, social security contributions etc. The 'tax collected' amount reflects taxes not suffered by the group, but taxes that were collected by the group on behalf of revenue authorities (e.g. PAYE and Value Added Tax).

In FY20, MultiChoice contributed ZAR12.0bn in aggregate (FY19: ZAR10.2bn) to the fiscus of the countries we operate in.

The contribution comprises taxes paid(1) of ZAR5.1bn (FY19: ZAR4.9bn) and taxes collected(2) (on behalf of governments) of ZAR6.9bn (FY19: ZAR5.3bn).

The breakdown of our tax contribution per segment is set out below:

DELIVERING VALUE TO GOVERNMENTS

Governments across our footprint face a complex and delicate balancing act. They rely heavily on revenue arising from tax contributions made by corporate taxpayers. Our contribution to government revenue is through collecting and paying over indirect taxes on their behalf, and by paying over a substantial amount through direct corporate income and other taxes. Governments have a broader social mandate to fulfil, which includes social upliftment, access to services and creating and enforcing laws that protect society's various constituencies fairly.

We understand the challenges governments face and always seek to play our part in supporting the development and sustainability of the countries and industries in which we operate.

MultiChoice complies with all our statutory obligations and builds good, honest and open working relationships with tax authorities founded on trust.

We have robust tax risk management measures in place (as documented in our group tax policy) and place a high regard on our tax and corporate reputation. We do not enter into transactions that detract from this reputation. We endeavour to ensure our tax objectives do not conflict with our corporate social responsibility objectives.

DELIVERING VALUE TO OUR REGULATORS

It is important for the regulators across our footprint to try to keep pace with a continuously and rapidly evolving environment and balance the need for continuity and stability in their regulatory frameworks. These frameworks need to support a level and competitive playing field without prejudicing certain constituencies in favour of others.

Although the group operates in a highly regulated environment, which often results in complex and onerous operating conditions, we remain supportive of balanced, evidence-supported and equally applied regulations that ultimately protect consumers. As such, we remain committed to working with our regulators to ensure appropriate and fair outcomes of ongoing licensing processes and regulatory reviews. In FY20, we paid ZAR212m in regulatory fees across our footprint (FY19: ZAR192m).

Remaining compliant with all laws and regulations remains of utmost importance to us. Our related corporate policies are available on our website. Further, we aim to employ best practice when it comes to governance of our organisation (details are available in our governance report). Finally, we uphold and protect the rights of our employees, customers and partners and limit any potential negative impacts on the environment and broader society.

CRITICAL ISSUES FOR OUR REGULATORS

HOW WE ARE ADDRESSING THEM

CRITICAL ISSUES FOR OUR REGULATORS

Independent Communications Authority of South Africa's (ICASA) draft findings on its inquiry into South Africa's subscription TV broadcasting market and its proposed changes to regulations on sport of national interest

Not only are these processes important to the regulator in our largest market, they are also important to our shareholders, employees, our suppliers and the public. All of these stakeholders would be impacted by changes in these critical regulations.

HOW WE ARE ADDRESSING THEM

On ICASA's subscription TV broadcasting market inquiry, we remain supportive of forward-looking and evidence-based regulations, applied equally to all market participants. We do not believe the draft findings meet these criteria. As such, we continue engaging constructively with the regulator and will be participating in the second iteration of public hearings. We hope the outcome of the regulations will be supportive of the industry as a whole, including content providers and customers.

ICASA's proposed amendments to regulations on sporting events of national interest were due to be published in March 2020. However, we now anticipate the process will be finalised during the course of the year. The current regulations create a win-win situation for all stakeholders and work well for the industry. The proposed amendments were not supported by various local and international sport federations or by us. Further, they are not tenable given the current financial state of the public broadcaster. We hope the next draft amendments will represent a significant improvement as we continue our engagements with the regulator. We also anticipate further inquiries to be launched dealing with must-carry rules, among other regulatory processes.

CRITICAL ISSUES FOR OUR REGULATORS

References made about MultiChoice and its employees at the Zondo Commission

References were made in some instances to MultiChoice and its employees in the Zondo Commission.

HOW WE ARE ADDRESSING THEM

We support the commission and its objectives. At the time the allegations were made we denied them publicly. The comments made were baseless and we will be responding to them via submissions to the Zondo Commission. We believe our submissions will fully vindicate us.

Key focus areas going forward

Tax

In terms of our approach to tax, we will continue complying with tax laws and regulations and will collect and/or pay the right and due amount of tax to the governments in our markets of operation. We will also continue building relationships of trust with governments and tax authorities and participate in public processes to discuss and provide input on formulating tax policy and work proactively with both industry bodies, such as the Africa Industry Tax Association, and government associations, such as the Africa Tax Administration Forum on tax policy, tax compliance and tax administration issues.

Sector regulation

In terms of our regulatory approach, the group will ensure ongoing compliance with the applicable regulations and best practices across the jurisdictions in which we operate. We will also participate in the review of existing legislation and regulations, or in processes where regulators are looking to introduce new regulations which may have an impact on our business and industry. We will renew any requisite licences as necessary.

The regulatory landscape in South Africa is characterised by constant change and posed challenges for our operations during the year under review. We welcomed the president's decision to merge the Department of Communications with the Department of Telecommunications and Postal Services into the Department of Communications and Digital Technologies. We also welcomed the establishment of the presidential commission on 4IR, to which our group chief executive officer (CEO) was appointed.

The long-awaited draft white paper policy on audio visual and digital content services unfortunately did not materialise. This would have paved the way for bringing OTT services into the regulatory fold. We continued engaging constructively in several regulatory initiatives by ICASA, including among others, the review of regulations on national sporting events, must-carry rules and people living with disabilities.

During the year, ICASA published its draft findings document on the inquiry into the state of competition in the subscription TV broadcasting sector. This process is ongoing and we only anticipate its finalisation in the new financial year. The regulatory environment in the Rest of Africa remains volatile. We regularly engage with regulators and authorities across our territories on a range of matters impacting the business. A key issue is licensing, as group entities in the Rest of Africa hold multiple licences and the terms and conditions of licensing are critical. Key licences in Ghana, Malawi, Uganda and Nigeria were successfully renewed or reissued in FY19 and FY20.

Another key area of ongoing engagements with regulators is the introduction of new legislation and/or regulatory obligations (including laws of general application addressing consumer protection and data protection), tariff control in some territories, and sector-specific regulations.

Business risks are generally mitigated through actively participating in consulting with the public. However, consulting in some territories is not always enough, which remains a concern. Further engagements are often necessary to clarify the nature and scope of application.

Compliance remains a key focus area. This requires consistent monitoring and evaluation of compliance levels across group entities in the Rest of Africa.